e.l.f. Beauty's (ELF) upcoming launch of its Rhode products across Sephora stores in Europe presents an opportunity to contribute $150 million to $200 million in annual sales for the company's skincare brand, Bank of America Research said in a Tuesday research note.

BofA increased its fiscal Q2 and Q3 revenue guidance for the Rhode segment to $146 million and $160 million, respectively, from $130 million and $141 million earlier, supported by its summer collections and expectations for a meaningful Sephora Europe expansion.

e.l.f. Beauty's launch of hair care products benefits from robust category growth, with potential for the hair care line to reach that of the company's skincare segment over time, analysts wrote.

The company's decision to reinvest $50 million in fiscal Q1 tariff refunds into pricing and marketing to ramp up innovation is the right strategy for a growth company to gain market share, according to the note.

BofA reiterated its buy rating on the stock and boosted its price target to $118 per share from $100.

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